Browse Tag: interest

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Having “The Talk” About Making Your Money Work Harder: Part 5 – Net Worth

Welcome back to our five part series on making your money work harder! This series is part of a BIG conversation I had with J where we talked about other ways to invest his money beyond the Bank of Mom.

In part 1, we talked about savings accounts, in part 2 savings bonds, in part 3 CDs, in part 4 stocks and today in part 5 we’ll wrap up our discussion with keeping track of your net worth.

Paying attention

It sounds a little pretentious, doesn’t it? Keeping track of your “net worth.” Like something only rich people do.

But think about this. If you go on a diet, do you log your meals and calories? What about if you’re training for a marathon? Would you write down your runs and workouts? And if you want to cut back on social media? Would you track your time?

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Having “The Talk” About Making Your Money Work Harder: Part 4 – Stocks

Welcome back to our five part series on making your money work harder! This series is part of a BIG conversation I had with J where we talked about other ways to invest his money beyond the Bank of Mom.

In part 1, we talked about savings accounts, in part 2 savings bonds, in part 3 CDs and now for part 4, my favorite conversation, stocks.

What are stocks?

A stock is a piece of a company. People buy stocks (or shares) of a company, and with that money, the company can grow their operations. When you own stock in a company, you actually own a piece of that company!

How much does it cost to buy stocks?

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Having “The Talk” About Making Your Money Work Harder: Part 3 – CDs

Welcome back to our five part series on making your money work harder! This series is part of a BIG conversation I had with J where we talked about other ways to invest his money beyond the Bank of Mom.

In part 1, we talked about savings accounts, in part 2 we discussed savings bonds and now here’s a recap of our conversation on CDs.

What are CDs?

CD stands for “Certificate of Deposit” and you can open one at your bank or credit union. CDs are very similar to standard savings accounts except you deposit a fixed amount of money for a fixed period of time at a guaranteed interest rate.

CDs typically earn a higher interest rate than standard savings accounts. In reference to our series here, CDs are making our money work the hardest so far — harder than both savings accounts AND savings bonds. (Well… except the Bank of Mom, which pays quite a bit.)

Additionally, you can earn a higher rate with a larger opening deposit and a longer term.

Some banks offer standard CDs only, and other banks may have additional types. Ally offers three types of CDs — a High Yield CD, a No Penalty CD and a Raise Your Rate CD.

When your CD matures (meaning that your fixed period of time is up), you’ll get a notice from your bank or credit union. At that time, you can either cash it out (receiving the principal plus interest) OR roll the money over into a new CD (and potentially add funds to it at this time).

What are the Pros and Cons?

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Having “The Talk” About Making Your Money Work Harder: Part 2 – Savings Bonds

Welcome back to our five part series on making your money work harder! If you remember, this series is part of a BIG conversation I had with J where we talked about other ways to invest his money beyond the Bank of Mom.

In part 1, we talked about savings accounts and now here’s a recap of our conversation on savings bonds.

What Are (Savings) Bonds?

In the most simple language possible, I tried to explain that a savings bond is a loan that you make to the government. You buy the bond, and the government uses the money now. After time passes (up to 30 years), you get your money back PLUS interest.

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Having “The Talk” About Making Your Money Work Harder: Part 1

I’m really excited to start this post today! J and I had some great conversations this weekend that I will write about in a five-part series on Making Your Money Work Harder.

First, we reviewed how we’ve already started making our money work harder by saving.

If you’ve been around for awhile, you know the drill, but just in case you’re new, here’s the skinny:

  • I pay J 3% interest on the money he puts into his savings envelope every month. I give him a paper statement and email him the same statement each month (posterity!). As he records the interest in his register, we review how the month went and look at how he earned more interest than in previous months. (Read one of our recent summaries here.)
  • A few times each year, we take a trip to our local bank and deposit the money. Bank visits are a great time for conversation, and J always enjoys going because the tellers are often really nice to him. They love to see kids!
  • After that, I keep the minimum in the account to avoid a fee and transfer the rest to an online bank that pays a higher interest rate. Read all about that here.

Today we logged in to the local and online bank accounts. We reviewed the amount in each account and noted the current interest rate. The local bank account has a rate of 0.01% — yikes! The online bank account’s rate is 1.20% — not too bad (comparatively speaking).

We discussed wanting a high interest rate when you’re saving (so you earn more). And when you’re borrowing, you want the interest rate to be low (so it doesn’t cost you as much).

Just a side note, we haven’t really talked about borrowing or debt yet. I’m hoping to get the savings and growth lessons underway to have more TIME on our side. After we talk about saving and investing, start the accounts we want to start and look/talk about them monthly, we’ll move on to borrowing and debt.

I told J that there were OTHER ways of putting his money to work, ways that may pay even more. He was excited! He pulled up a chair and said, “Okay, I want to know those things.”

I’ll cover each topic in depth in the subsequent posts, but as an overview, we dived into:

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